Globalization in the pharmaceutical industry: Where are drugs invented?

I’ve just had a paper published in Nature Reviews Drug Discovery, using data from DrugPatentWatch to profile the locations of drug invention for the past decade.

The location of drug development is important for two reasons. Firstly, it is important to track the global spread of innovation. Much late stage drug development (e.g. clinical trials) and manufacturing have moved to lower wage-cost countries, but trends in the location of invention has not been clearly described. Knowing where drug invention is occurring can help streamline drug development by identifying ideal locations for research facilities. Secondly it is important to know where invention is occurring, because that may affect which drugs are developed. Early-stage research funding and, by extension, the research itself, is likely to be focused on conditions affecting the countries in which these activities are occurring. For example, research in the United States might focus on conditions such as heart disease and stroke, whereas research in Japan might emphasize stomach cancer.

By examining the patents covering drugs developed over the last decade, I was able to ascertain the locations of the inventors. Focusing on inventors is important because it gives a clear indication of where the control of the invention was located. Patents are required to list the names and locations of the individual(s) who maintained intellectual domination of the invention. Failure to list all inventors, or listing too many inventors, can yield an invalid patent. Whereas one might consider assessing globalization of invention by focusing on the location of the company funding the research, or the company listed on the patent, these strategies are flawed. The company funding the research may not be the same company which conducted the research (e.g. Japanese companies funded many of the early US biotechnology companies, but the inventions occurred in the US by US researchers, so focusing on the funder might produce the incorrect conclusion that the innovation was Japan-based), and many companies have facilities in multiple countries, making it impossible to determine in which of the countries an invention might have occurred. Looking at the company listed on a patent is also flawed. The company listed on a patent might not have been the company that housed the researchers or, even worse, it may be a tax shelter based in a country where no invention occurred. So, by focusing on the locations of the listed inventors it is possible to determine where the invention occurred. An additional benefit of this strategy is that it enables inclusion of patenters from numerous countries. For example for a patent listing one US-based and two Canadian inventors, the US would be given 1/3 credit for an invention, and Canada 2/3 credit.

So, what did I find? In short, the US and the legacy pharmaceutical countries in Europe (United Kingdom, Germany, Sweden, France and Switzerland) have been responsible for the bulk of new drugs invented over the past decade, and there is no indication that this dominance is waning. Emerging economies such as India and China were largely absent. For more details, please see the paper at Nature Reviews Drug Discovery: Location of pharmaceutical innovation: 2000–2009.

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TS Elliott

November 3, 2010

I am doing research for a client Pressure BioSciences, Inc. Your blog is very informative. I enjoy all the research that you have done and how clearly you present your findings. Thank you for all of the awesome articles. Are you on twitter?

back then I wrote: “It seems like we are trying to look at things that are “meaningful” and that can be touted as the “successful output” of R&D money invested by the government. I get that “all patents” arguably isn’t a particularly useful metric, but it is a starting point. If we could somehow isolate a subset of patents that are “meaningful,” wouldn’t that be great? Has anyone attempted to track the relationship between research funding and marketed therapies (drugs, medical devices, medical procedures)? 1. There is at least one database of patents that are related to marketed pharmaceuticals (http://drugpatentwatch.com); there are probably other ways to discover patents related to “meaningful” products. If someone can filter the Dashboard just to see these things, it could be very interesting. 2. With a some legwork (a little? a lot? a WHOLE lot?), someone could probably trace back all of the research grants that funded a successful vaccine, or cancer cure, or whatever. Displaying the investment dollars that created that product would probably be a very compelling story to tell: when did gov’t funding help develop a new laboratory technique, discover a new biomarker, identify the gene involved in the disorder, etc.?? This would no doubt involve digging around in journal publications or conducting interviews with the scientists involved. 3. Perhaps an easier project would be to research the history of a particular rare disease treatment, or maybe all of them (only around 350 of them have ever been approved by the FDA). These drugs are the types of beneficial societal impacts that taxpayers are likely willing to pay for and will appreciate (lack of interest by major for-profit companies to invest in the early stage R&D AND it saves or improves the quality of life for Americans).”

Viren Konde

March 23, 2011

I think, this is going to be a landmark review article covering the profiles the inventors by patents in the pharmaceutical drugs category that are approved by the FDA from 2000 to 2009. I can not wait to read your paper. Congratulations and Thanks for such a contribution to intellectual capital!